Mahadeo Cotton Mills Ltd vs ORIENTAL INSURANCE CO LTD

M /s. Mahadeo Cotton Mills Ltd., Bhilwara through its Director Shri Rajkumar Mansinghka has filed this complaint under Sec. 12 read with Sec. 17(a)(i) of the Consumer Protection Act, 1986 (''the Act'' herein) against (i) Oriental Insurance Co. Ltd., through Branch Manager, Bhilwara (opposite party No. 1), (ii) Senior Divisional Manager, Oriental Insurance Co. Ltd., Bhilwara (opposite party No. 2), (iii) Jai Bharat Road Carriers Pvt. Ltd., Ahmedabad (opposite party No. 3) and (iv) M/s. West Bengal Industrial Transport Complex Pvt. Ltd., Calcutta (opposite party No. 4). Opposite parties No. 1 and 2 shall hereinafter be referred to as ''the insurers''. Opposite parties No. 3 and 4 will hereinafter be referred to as '' the transporters.''

THE complaint was filed on 10.8.90. The complainant has alleged that opposite party No. 3 has agreed to carry the goods of the complainant on behalf of opposite party No. 4 in a public carrier. The complainant has stated that the complainant consigned the goods for being carried to Calcutta at Bhilwara office of opposite party No. 3. It entrusted the goods to opposite party No. 3. It issued Lorry Receipts (LRs) on behalf of opposite party No. 4. It has been averred that the complainant company entrusted Lorry Receipts, invoices etc. alongwith hundies on the Bank of Rajasthan, Bhilwara. The Bank of Rajasthan Branch, Bhilwara after sale of hundies sent the entire documents to its Calcutta branch and gave intimation to the parties. The complaint is said to have booked the goods mentioned as under : S.No. Bill No. L.R. No. Date Amount of bill 1. 60 2383 25.7.88 6136.00 2. 67 44978 27.7.88 5305.00 3. 68 44979 27.7.88 5920.00 4. 88 45219 5.8.88 5309.00 5. 92 45292 9.8.88 6749.00 6. 99 45299 9.8.88 5305.00 7. 125 2998 2.9.88 5650.00 8. 126 2999 2.9.88 5650.00 9. 127 3000 2.9.88 5305.00 10. 128 5551 2.9.88 5305.00 11. 134 41593 5.9.88 9166.00 12. 148 46526 8.9.88 6497.00 13. 162 46355 12.9.88 5955.00 14. 54 2377 25.7.88 5891.00 15. 55 2378 25.7.88 5891.00 16. 56 2379 25.7.88 5891.00 17. 161 46356 12.9.88 5955.00 18. 132 41595 5.9.88 5950.00 19. 102 45718 18.8.88 5305.00 20. 117 46338 31.8.88 8342.00 Total amount : 1,21,477.00

The complainant has assigned the documents to the Bank of Rajasthan Ltd. and so it was incumbent on the transporters to deliver the goods consigned after payment to the Bank and obtain receipt thereof. The Lorry Receipts which were issued in the name were of Bank of Rajasthan. The complainant had obtained an insurance policy covering all risks from opposite party No. 1. It was an open insurance policy according to the rules of the insurance company. Before sending the goods, declaration forms after filing them were to be delivered. The complainant has alleged that all the goods consigned covered all risks. The complainant gave declaration of the goods consigned, when the goods were not delivered despite entrusting them to opposite party No. 3 even after three months and did not obtain the documents from the Bank. Opposite party No. 3. was contacted but no specific reply was given. A letter dated 15.12.88 was written mentioning the cost of the goods including interest as Rs. 1,29,587/ - and submitted the claim to opposite parties No. 3 and 4 for Rs. 1,29,587/ -. To the same effect a letter was written on 20.1.89 to the insurers (opposite party No. 4). No amount was paid. Letter was written on 13.3.89 for intimating the receipt of the goods of 20 Lorry Receipts. Subsequent letter dated 18.4.89 was also written. A registered letter dated 24.5.89 and telegram dated 8.6.89 were given but no intimation with regard to the consigned goods was given. Opposite party No. 3 informed vide letter dated 22.6.89 to the complainant that the goods sent by the complainant could not been delivered to the concerned parties as conveyed by the opposite party No. 4. Similar letter is said to have been written by opposite party No. 3 to opposite party No. 1 on 22.6.89. As soon as information was received by the complainant, the complainant informed opposite party No. 2 by letter dated 22.6.89. It lodged claim before opposite party No. 2 vide letter dated 22.6.89. Photo stat copies of all the receipts were sent that delivery has not been made. A sum of Rs. 1,42,155.60 was demanded. Opposite parties No. 1 and 2 informed the complainant that matter is being investigated. Subsequently by letter dated 11.10.89 opposite party No. 1 informed the complainant that its claim has not been accepted and the case has been treated as ''no claim''. Further that no amount will be paid to him. In the circumstances the complainant filed the complaint against the insurers and the transporters who are opposite parties No. 1 and 2 and opposite parties No. 3 and 4 respectively. The complainant claimed Rs. 1,21,477/ - being the cost of the goods and Rs. 49,784/ - as interest and compensation. Besides the aforesaid, interest @ 21% from the date of the presentation of the complaint until realization was claimed jointly and severally against the opposite parties. Exemplary damages to the extent of Rs. 1,00,000/ - were also sought. Schedule A was appended in regard to the calculation of the interest.

OPPOSITE parties No. 1 and 2 submitted version of the case on 11.1.91 along with Surveyors, Supervisors, Tracers, Investigators and Legal Advisors report dated 28.7.89. Certain preliminary objections were raised. One was that the complaint has been filed against opposite parties No. 1 and 2 as insurers and opposite parties No. 3 and 4 as carriers for which there is no provision under the Act. The responsibilities of opposite parties No. 1 and 2 and opposite parties No. 3 and 4 are separate and no cause of action joint or several arose in this case. It was submitted that the insurers got the investigation conducted impartially and independently and thereafter obtained the report and repudiated the claim of the complainant. Information about which was given to the complainant and, therefore, there was no deficiency in service, so far as the insurers are concerned. It was also submitted that many complex and complicated questions are involved in the , complaint which require elaborate enquiry and examination of oral and documentary evidence etc. It was admitted that open policy No. 24240/ 301/50/88/0038 was issued. It was for the period 19.9.88 to 18.9.99. Conditions are contained in Clauses 11, 14, 18 and MR 37. The insured was required to give declaration of each consignment in a separate declaration forms within 24 hours. An objection was taken that in the Lorry Receipts, the photo stat copies of which were produced description of the goods is contained. Para 11 of the version of the case is as under : ''YAHA KI PARIVADI COMPANY KE KATHNANUSAR MUL LORRY RTTZ USKE KABJE ME HAI TATHA BANK OF RAJASTHAN CONSIGNEE HAI, NE KOEE ''NON -DELIVERY CERTIFICATE'' NAHI KIYA HUA HAI. UTTARDATA BIMA COMPANY KE ANVESHAK KE ANUSAR KRETAO DWARA VIPAKSHI SANKHYA 3 WA 4 SE UNDERTAKING KE AADHAR PUR TATHAKATHIT MAL KI DELIVERY LEE JA CHUKI HAI. AISYI AWASTHA MAI UTTARDATA VIMA COMPANY KO WYARTH AVAM NIRARTHAK PAKSHKAR BANAYA GAYA HAI. VIKALP MAI NIVEDAN HAI KI UKT PARIVAD UTTARDATA BIMA COMPANY SE BADNIYATI WA CROD DWARA DAVA RASHI WASOOL KARNE KI CHESHTA MATR HAI JISKE.LIYE MANY NYAYALAYE DWARA KADAPI ANUMATI (PERMISSION) NAHI DI JA SAKTI HAI. ATAH UKT PARIVAD PRATHAM DRASHTYA NIRASTNIYE HAI.'' Para 16 of the version of the case reads as follows : xxx xxx xxx xxx xxx

THE claim for compensation was denied. With the version of the case report dated 28.7.89, letter dated 30.10.89, photo stat copies of the letters and photo stat copy of the policy were submitted. In support of the complaint Rajkumar Mansinghka submitted his affidavit dated 5.8.91. Affidavit of Narendra Kumar Jain Chief Manager of Bank of Rajasthan, Bhilwara Branch was also submitted. He stated that the Bank of Rajasthan Branch, Calcutta on receipt of the documents sent intimation to the parties but no party contacted the bank and paid the amount. The parties did not obtain the documents. Affidavit of Chandmal Nimodia Manager -cum -Accountant was produced. The insurers submitted affidavit of Shri D.K. Tewari. Opposite parties No. 3 and 4 did not file any version of the case. Ex parte proceedings were taken against them. Besides this oral and documentary evidence, no other evidence was produced by the parties. Both the parties submitted written arguments.

WE have carefully considered the complaint, version of the case filed on behalf of opposite parties No. 1 and 2, documents and affidavits submitted by the parties and carefully considered the written arguments. In the written arguments besides meeting the preliminary objections raised on behalf of opposite parties No. 1 and 2, it was submitted that the insurers failed to perform the service in a proper manner and it suffered form deficiency inasmuch as the claim was rejected by the opposite parties No. 1 and 2 improperly. It was submitted that the refusal of the claim of the insured was not proper. It was stated that certain clarification was sought in regard to para 16 of the version of the case particularly in regard to lines 4, 5 and 8. After that on a fresh request by the insured, opposite parries No. 1 and 2 sought clarification from the investigator who submitted the report dated 30 -10 -89. Opposite parties No. 1 and 2 are said to have written a letter dated 11.10.89 about the repudiation of the claim and the complainant by letter dated 20.10.89 drew attention of the defect of the tracer and investigators report but that has not been produced by the insurers. Two reports submitted by the insurers are of July 28, 1989 which was received by the insured on Aug. 2, 1989. The second report is of Oct. 3, 1989 which was received by the insured on Oct. 9,1989. It was submitted that both the reports were introductory and those reports do not relate to investigation and so adverse inference should be drawn. The case of the opposite parties No. 1 and 2 is that the claim of the complainant was properly investigated and thereafter it was repudiated and after repudiation the complaint is not maintainable in regard to the settlement of the claim. The first letter of the insurers is dated 11.10.89 by which it was treated as no claim. It will be useful to reproduce the entire letter. ''Kindly refer your letter dt. 22.6.89 regarding non -delivery claim. We wish to inform you that the claim was entrusted to Tracer for Tracing. Their findings are as under : 1. As per reported in our report dt. 28.7.89 goods have been delivered by the carriers but without collecting the original GRs on the basis of an undertaking given by M/s. Manglam Synthetics. 2. The delivery of the consignment was taken by M/s. Shree Indra Textiles of 59, Cotton Street, Calcutta who were the agent of the consignee, 3. It is very strange that when the documents (consignment notes) were sent through banker M/s. S.S.B.J., were likely to be returned by their banker within 2 -3 months from the date of booking of the consignments if lying uncleared by the consignee. In view of the above it is evident that the consignee has taken delivery of consignments at destination. There is no Nondelivery loss as claimed by you which please note. We are closing the claim file treating as No claim.''

THEREAFTER a letter dated 20.10.89 was addressed to opposite parties No. 1 and 2 pointing out that the report submitted was without proper investigation into the matter and without knowing the actual position. An averment was made that there was some malice on the part of the transporters. Subsequently another letter dated 1.12.89 was also written. As soon as information about the claim was received the opposite parties appointed M/s. Ilas Consultants Pvt. Ltd. for investigation who submitted the report on 28.7.89 and thereafter intimated vide letter dated 11.10.89 which is Anx. 78 produced by the complainant. The report dated 28.7.89 and report dated 3.10.89 alongwith the enclosures have been produced on the record. In the report dated 28.7.89 of Ilas Consultants Pvt. Ltd. amongst others it is written : ''It is also very strange that Mill have not lodged any claim upon you till 22.6.89 i.e. after a lapse of about a year -particularly when the consignment notes sent through the State Bank of Bikaner and Jaipur were likely to be returned by their Banker within 2 -3 months from the date of the booking of the consignments if lying uncleared by the consignee. In view of the above, it is evident that the consignments have been taken delivery of by the agent of the mill as well as agent of the consignee. There was no non -delivery as complaint of the Mills. Thanking you.'' Ilas Consultants Pvt. Ltd. thereafter wrote letter dated 3.10.89 to the insurer. It was stated : ''Under the above circumstances, we are of the views that : - (A) As per reported in our report dated 28.7.89 goods have been delivered by the carriers but without collecting original GRs and on the basis of an undertaking given by M/s. Mangalam Synthetics. (B) It is further learnt that M/s. Shree Indra Textiles of 59, Cotton Street, Calcutta, who were the agent of the mill have also acted as agent of the consignee. Mr. Chaturdan Charan the proprietor of this firm, is however not available at Calcutta for about 6 months and M/s. Jai Bharat Road Carriers Pvt. Ltd., were the agent of M/s. West Bengal Industrial Transport Complex (P) Ltd. (who issued the consignments notes) the consignments note having been affix with the rubber stamp of M/s. Jai Bharat Road Carriers Pvt. Ltd. Bhilwara. (C) It is also very strange that mill have not lodged any claim upon you till 22.6.89 i.e. after a lapse of about a year. Particularly when the consignment notes sent through the State Bank of Bikaner and Jaipur were likely to be returned by their Banker within 2 -3 months from the date of the booking of the consignments if lying uncleared by the consignee. In view of the above, it is evident that the consignments have been taken delivery of by the agent of the mill as well as agent of the consignee, there was no non -delivery as complaint of by the mills. Thanking you.''

It was on receipt of this letter that letter of repudiation dated 11.10.89 was sent to the complainant standing that no amount can be claimed and it is to be treated as no claim. The contention on behalf of opposite parties No. 1 and 2 is that when they have investigated the claim and treated it as no claim, the Redressal Forum should not adjudicate upon the complaint. It was submitted on behalf of opposite parties No. 1 and 2 that after investigation the surveyor came to the conclusion that the consignee has taken delivery of consignment at the destination and that there is no non -delivery loss as claimed by the complainant and, therefore, the claim filed was treated as no claim. The question that arises for determination is whether the State Commission should adjudicate the present claim of the complainant. We have already extracted the letter of repudiation dated 11.10.89 and the report of the surveyor dated 28.7.89 and also letter dated 3.10.89. The grounds have been mentioned in the letter of repudiation. In M/s. Janta Machine Tools v. Oriental Insurance Co., I (1991) CPJ 508 (NC) it was held as under : ''From the facts disclosed by the record and particularly the averments contained in the counter affidavit filed by the first respondent it is seen that the Insurance Company had fully investigated into the claim put forward by the complainant, got surveys conducted and had finally come to the conclusion that the claim put forward by the complainant was false and accordingly informed the complainant that his claim was rejected. Thus this is not a case where the Insurance Company did not take prompt and necessary steps for deciding the claim under the policies of insurance. It may be that the complainant is not satisfied with the said rejection of his claim by the Insurance Company. Having regard to the facts and circumstances of this case and the nature of the controversy between the parties we consider that this is a matter that should be adjudicated before a Civil Court where the complainant as well as the respondent will have ample opportunities to examine witnesses at length, take out Commission for local inspections etc. and have an elaborate trial of the case. Without prejudice to the right of the complainant to take resort to the remedy by way of civil suit before the proper Court, we dismiss this petition.''

IN New Jaipur Dyeing and Tent Works v. Oriental Insurance Co. Ltd. II (1991) CPJ 241 (NC) the National Commission has observed : ''As the upshot of the facts recorded above is that the appellant has reasonable grounds to doubt the genuineness of the claim, as such the non -payment of the insurance amount under the policies cannot be deemed to be a deficiency in service arising from negligence. Under Sec. 14 of the Consumer Protection Act, 1986 compensation can be granted to a consumer for loss or injury arising from deficiency in goods supplied or services rendered provided the same is due to negligence. Such a presumption or negligence cannot normally arise where the factum of deficiency is established on the basis of balance of evidence or preponderance of probabilities. Hence the order of the State Commission is set aside and the parties are left to pursue their claims through States Investigating Agencies and the Courts of Law.''

THE State Consumer Disputes Redressal Commission, Delhi while following M/s. Janta Machine Tools (supra) dismissed the complaint. It was observed in Continental Chemical Ltd. v. Oriental Insurance Co. and Another II (1991) CPJ 354 as under : ''The question that arises for determination is as to whether the State Commission constituted under the Consumer Protection Act has got the jurisdiction to decide the present complaint. The facts of the case as pleaded by the parties have been given in detail above. From the perusal of the pleas, it is evident that respondent No. 1 after making investigations through surveyor, rejected the claim of the complainant. In order to determine as to whether in view of the aforesaid situation, the complainant still can recover the amount from respondent No. 1, it requires leading of detailed evidence and examination and cross - examination of the witnesses. In the circumstances, it is appropriate that the matter should be decided by the Civil Court. In the said view, we are fortified by a decision of the National Commission in M/s. Janta Machine Tools v. Oriental Insurance Co. Ltd. (Original Petition No. /1990 -I (1991) CPJ 234 decided on August 21, 1990).'' The same view was taken by SCDRC, Delhi in M/s. Krishan Chand and Ors. v. The Oriental Insurance Co. I (1991) CPJ 678. 12. The National Commission in S. Bhagat Singh v. Oriental insurance Co. Ltd. (Revision Petition No. 7/91) took note of Janta Machine Tools case as well as S.K. Abdul Sukurs case reported in II (1991) CPJ 202 (NC). In M/s. Rajdeep Leasing and Finance Pvt. Ltd. New Delhi v. New India Assurance Co. and Others I (1992) CPJ 36 (NC) (First Appeal No. 61/91 decided on 14.11.91) the National Commission observed as follows : ''It is not necessary for us to express any opinion on the merits of this contention in view of the conclusion reached by us that the State Commission was right in holding that on the facts and circumstances of the present case it cannot be said that the Insurance Company had repudiated the claim without proper application of its mind after holding an investigation and hence if the complainant feels aggrieved by the decision of the Insurance Company that the claim was false and fabricated the proper remedy to be resorted to is only the institution of a civil suit. As value of the final report made by the police is one of the aspects which will fall for consideration by the Court. All that need be stated for our present purpose is that the rejection by the Insurance Company of the claim put forward by the complainant after obtaining and considering two separate survey reports from qualified surveyors and three legal opinions from different eminent Counsel cannot be said to constitute a deficiency in service so as to give rise to a cause of action for a complaint under the Consumer Protection Act. The present case is directly governed by the dictum laid down by this Commission in M/s. Janta Machine Tools v. Oriental Insurance Company Ltd.''

THE insurers have considered the matter in all its aspects and they took the decision to repudiate the claim in good faith after application of mind to the relevant facts and circumstances. Having perused the report dated 28.7.89 and the letter dated 3.10.89 and the letter of repudiation dated 11.10.89 we are of opinion that the rejection by the insurers of the claim cannot be said to constitute deficiency in service on the part of the insurers in relation to performance of their duties under the contract of insurance so as to give rise to a cause of action for a complainant under the Act. The case is covered by the principles laid down by the National Commission in M/s. Janta Machine Tools case (supra). Not only this opposite parties No. 3 and 4 (transporters) have not contested the complaint. The case of opposite parties No. 1 and 2 is that transporters and the complainant are in collusion with each other and that the goods sent by the LRs were taken delivery of at the destination. Further that there was no non -delivery loss as claimed by the complainant. In the written arguments submitted by the insurers it has been stated that complaint against opposite parties No. 1 and 2 is on the basis of the deficiency in service. According to them the claim of the complainant is not under any contract, but it is on account of the wrong action of the carrier and their agents and, therefore, no cause of action has arisen against them and so on account of non -delivery, the liability is that of opposite parties No. 3 and 4 and it is not maintainable under the Act. Be that as it may, in view of the principles laid down by the National Commission and having regard to the facts and circumstances of this case and the nature of controversy between the parties, we are of opinion that this is a matter that should be adjudicated before the Civil Court. The complainant may seek redressal in a Civil Court.

THE complaint is dismissed subject to observations that the complainant may file a civil suit for recovery of the disputed amount, if so advised. In the circumstances of the case the parties are left to bear their own costs. Complaint dismissed.